MCA underwriting evaluates bank deposits (volume, consistency, NSF frequency, average daily balance), personal credit (FICO, public records), and business profile (industry, time in business, existing debt). The outputs are: approved advance amount (75–150% of monthly average deposits), factor rate (1.10–1.49 depending on risk profile), and holdback percentage (8–18%). No collateral is pledged — the advance is secured by future receivables.
2026 Baseline Pre-Underwriting Criteria
Before any deeper scoring happens, every application is checked against a simple floor. Below these numbers, most MCA funders won't consider the file at all — above them, you move into the scoring model described in the rest of this guide.
| Criteria | Baseline | Why it matters |
|---|---|---|
| Minimum monthly revenue | $4,000–$6,000/month | Below this, deposit volume is too thin to support a meaningful advance amount or daily/weekly holdback. |
| Minimum ending balance | $4,000+ each month | A hard floor, checked on every statement in the review window — a monthly ending balance below this is a common automatic decline trigger. |
| Time in business | 6+ months | Funders need a repeatable revenue pattern, not a snapshot. Under 6 months, options narrow significantly. |
| Bank statement history | 6 consecutive months (minimum) | The standard underwriting review window. This now spans the full 6-month time-in-business minimum above, rather than a shorter 3-month snapshot. |
| Credit check | Soft pull for initial review | Checking your options doesn't affect your score. A hard pull typically occurs later, before final approval — see the FAQ below for what that means for your credit. |
For renewal/add-on eligibility on an existing advance (not a new application), see the MCA renewal guide — most funders offer a renewal once roughly 50–75% of the original advance has been repaid cleanly, not a fixed early-paydown percentage.
The Three Underwriting Inputs
Input 1: Bank Statements (Most Important)
The bank statement analysis is the core of MCA underwriting. Underwriters look at:
- Total 6-month deposit volume — determines the maximum advance amount
- Average daily balance — signals cash flow quality and buffer
- NSF/returned item count — the strongest negative risk signal
- Deposit day count — how many days per month show deposit activity
- Existing MCA holdbacks — visible as recurring ACH debits
- Deposit trend — growing, flat, or declining over the 6-month statement window
Input 2: Credit Profile
A personal credit pull (soft during initial review, hard before final approval) checks:
- Personal FICO score (minimum 500)
- Derogatory marks: bankruptcy, judgments, collections, late payments
- Personal debt load: existing personal loans, credit card balances
- No major public records against the business entity
Input 3: Business Profile
- Time in business: 6-month minimum; 2+ years = most favorable
- Industry: Some industries carry higher default rates and receive higher base factor rates (restaurants, retail, bars) vs. lower-risk (healthcare, professional services, utilities)
- Entity type: LLC and corporations are preferred over sole proprietorships for larger advances
- Owner age/stability: Some underwriters look at business owner tenure and address stability
How Factor Rates Are Determined
Factor rates are not arbitrary — they're calculated from a risk scoring model. Each risk factor adjusts the base rate up or down:
Factor Rate Reference Table
| Profile Type | Factor Rate Range | Key Characteristics |
|---|---|---|
| Tier A (Excellent) | 1.10–1.18 | 680+ FICO, 2+ years, zero NSFs, strong consistent deposits, no existing MCA |
| Tier B (Good) | 1.18–1.25 | 580–679 FICO, 1–2 years, 0–2 NSFs, consistent deposits |
| Tier C (Standard) | 1.25–1.35 | 530–579 FICO, 6–12 months, moderate NSFs or one existing position |
| Tier D (Elevated Risk) | 1.35–1.45 | 500–529 FICO, recent BK, multiple NSFs, second position, or high-risk industry |
| Tier E (High Risk) | 1.45–1.49 | Minimum qualifying threshold — borderline approval factors |
How Holdback Percentage Is Set
The holdback percentage (the daily percentage of deposits deducted for repayment) is calculated to produce a repayment term of approximately 4–10 months for most positions. The lender wants repayment within a reasonable window — not so fast that the business can't sustain it, not so slow that the lender's capital is tied up too long.
The formula is approximately:
- Target repayment term: 6 months
- Business average daily deposits: $3,000
- Total repayment obligation: $32,000 advance × 1.25 factor = $40,000
- Required daily deduction: $40,000 ÷ (6 months × 22 business days) = $303/day
- Holdback %: $303 ÷ $3,000 = 10.1%
Actual holdback rates range from 8–18%, with higher rates on smaller advances (shorter terms) or higher-risk profiles.
How to Improve Your Underwriting Profile Before Applying
- Wait 180+ clean days: If you have recent NSFs, roughly six months of clean banking will move them out of the primary 6-month underwriting window
- Build your average daily balance: The difference between a $400 average daily balance and a $4,000 average daily balance is significant to underwriters
- Pay down existing debt: A first MCA that's 70% repaid looks very different than one that's 20% repaid — it signals responsible debt management
- Apply in a strong revenue stretch: If one of the last 6 months was unusually weak, wait until it falls outside the 6-month window
- Check and dispute credit errors: Free your FICO from incorrectly reported derogatory marks before applying
Apply With a Complete Understanding of the Process
500 FICO minimum. No hard pull on initial review. Decision in 2–4 hours.
Get My OfferFAQ
- Is MCA underwriting the same at every lender?
- No — each MCA provider has its own underwriting model, risk appetite, and industry preferences. One provider may specialize in restaurants and have more favorable terms for food service; another may be more aggressive on second positions. This is why comparing offers from multiple providers is valuable — the same application may produce different terms at different sources.
- Does applying for MCA hurt my credit score?
- The initial review uses a soft pull (no impact). A hard pull occurs later in the process before final approval. If you submit to multiple providers simultaneously, each hard pull can impact your score — typically 2–5 points per hard inquiry. This is why submitting to multiple providers within a short window (rate shopping) is better than staggered multiple applications spread over weeks.
- What happens if my application is declined?
- Ask for the specific decline reason — reputable providers will tell you. Common decline reasons: FICO under 500, chronic NSF pattern, insufficient deposit history, active bankruptcy, or too many existing positions. Most decline reasons are addressable over time. A decline today doesn't mean a decline in 90 days with a cleaner statement window.
- What is the minimum monthly revenue to qualify for MCA underwriting?
- The baseline floor most funders check first is $4,000–$6,000 in average monthly revenue with a minimum $4,000+ ending balance each month, plus at least 6 months in business. Below that combination, most funders won't move an application into full underwriting at all. Meeting the floor doesn't guarantee approval — it just means the file is eligible to be scored on the factors described in this guide.
- How many months of bank statements do I need to submit?
- T.A.G.'s underwriting baseline requires exactly 6 consecutive months of business bank statements. This now aligns with the 6-month time-in-business minimum — funders review your full 6-month operating history via bank statements, not a shorter 3-month snapshot.